Edited by P. J. Lloyd and Xiao-guang Zhang
Chapter 4: Savings functions for a multi-sector CGE model of the Chinese economy
Mei Wen and Peter Lloyd
Mei Wen and Peter Lloyd INTRODUCTION Savings provide resources for ﬁnancing ﬁxed capital formation. A high savings rate is considered a necessary condition for rapid economic growth. This paper constructs savings functions for China as part of the modelling of China’s economy in a multi-sector CGE model. Savings in any economy are sourced from four sectors: the household, government, business enterprise and foreign sectors. National savings are, therefore, the sum of savings from each sector: S = S H + SG + S E + S F (4.1) Foreign savings are equal to the deﬁcit on the current account of the balance of payments. Sometimes it is more convenient to express savings as a rate. Dividing by GDP, Y, the national savings rate can be expressed as s ≡ S/Y = w H s H + wGsG + w E s E + S F / Y. (4.2) That is, the national savings rate is the weighted average of the domestic savings rate of the sectors, with the weights being their respective shares of national income, plus the ratio of foreign savings to GDP. As foreign savings are small in China, this section examines domestic savings. Table 4.1 shows the domestic savings rate, that is, total domestic savings as a percentage of gross domestic product (GDP), for China, the OECD members, East Asia and the Paciﬁc, Japan and Korea. Figures in the table are ﬁve-year averages for the period 1960–94. These are calculated from data on yearly domestic savings rates...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.